AT&T Announces Record Smartphone Sales

AT&T says it sold more than 10 million smart phones in the fourth quarter of 2012, topping its previous record quarter of 9.4 million, set in the fourth quarter of 2011. 

This included best-ever quarterly sales of Android and Apple smart phones.

That said, the rest of world is where smart phone growth will be most extensive over the next decade. 

In part, that is because there are so many feature phones in use that can be upgraded. 

CES is "Post Smart Phone"

It is starting to look as though CES is not a "mobile" show, in the sense of it being a venue where major mobile product, software or service introductions should be expected. In that sense, it makes more sense that CES staffers talk about having reached the "post smart phone era."

What they might really mean is that CES has reached the post smart phone era. To be sure, there will still be reasons for many whose business is consumer electronics other than phones and tablets and mobility to be there. 

But the time when either computing devices or phones were key elements of the meeting likely has passed. 

I learned many years ago that when a smart and experienced executive says "something cannot be done," that statement has to be interpreted. It means "my organization cannot do that." 

Such statements never reflect another firm's ability to achieve something, only one specific entity's inability to do so. One might note that CES also is "post PC" in the same sense. What is really important for the future of computing probably does not show up at CES, either. 

In a similar manner, CES now appears to be unable to sell itself as a major venue for "mobile" interests. So there is a reason why CES staffers might say the "world has gone post smart phone." 

What that really means is only that CES has gone "post smart phone," in the sense of not being a place smart phone interests "need to be."

Source: http://www.economist.com/blogs/dailychart/2011/10/personal-technology

2. Mobile devices will exceed PCs and Internet Desktops over time. Morgan Stanley expects 10+ Billion devices till 2020:

Mobile devices are not limited to smartphones or tablets. It is a broader range like eReaders, MP3, Cell Phone, Car Electronics, Games, Wireless Home Appliances etc.

Source: http://www.morganstanley.com/views/perspectives/tablets_demand.pdf

3. Tablets are the biggest driver today and gain momentum in the enterprise as well.

4. The majority of time spent on PCs is consuming content which has a significant usage overlap with mobile devices. Tablets will reduce the PC consumption usage over time.

Source: http://www.morganstanley.com/views/perspectives/tablets_demand.pdf

Mobile’s Future is Changing "Offline," Not "Online"

Some, including entrepreneur Edward Aten, think mobile will be disruptive to the extent it solves "offline" problems for people, not "online" issues. 

In other words, the big opportunities are not so much in making the smart phone a better screen and experience, but making it a tool to solve problems of friction, inefficiency, incomplete information, tedium and excess capacity in the offline world. 

So the real value is less in the way a smart phone functions as a smaller-screen version of a PC, and more in the way mobility gets applied to solve a wider range of real-world problems in real time. 

Unlike some who casually say the "smart phone era is ending," Aten and others believe it is just beginning. That would tend to match past experience with really transforming technology. The benefits frequently are not seen for quite some time. 

The perhaps classic example is the "productivity revolution" personal computers were supposed to bring. Lots of people have studies the matter and been puzzled as to why the expected gains were not seen, even after decades of heavy investment. 

Technology adoption only improves productivity if it is accompanied by concurrent changes in the way work is done, way work is organized.

For example, many would note that there was a substantial increase in productivity during the twenty-year stretch from 1980 to 2000, fueled by companies' investments in enterprise-wide information technology. 

But some research has found scant evidence of major change in the 1980s, and highly-concentrated changes in the 1990s. In other words, a decade passed with very modest apparent gains, and even in the 1990s, when some vertical markets saw big gains, many other sectors really did not benefit very much.

In fact, just six industry segments showed clear evidence of productivity impact: semiconductors, wholesale, securities, retail, computer manufacturing and telecom (specifically "mobile").

But McKinsey analysts point out that there were several driving forces in each industry, that those forces were not the same in each industry, and that information technology was but one of several apparent drivers of productivity growth. 

'However, McKinsey research on the returns generated by these investments found that productivity growth occurred only when the technology was accompanied by thoughtful business process innovations tailored to sector- and company-specific business processes. 

In fact, technology adoption alone, without the accompanying changes in work practices, had little or even a negative impact on productivity.

One might therefore argue that mobile technology's ability to significantly disrupt various industries will hinge on how much each of those industries can reorganize its processes to adapt to mobility. 

History suggests progress will be uneven. 

Are We Already in the “Post Smart Phone Era?”

Have we now entered the “post smart phone” era? So says Shawn DuBravac, chief economist at the Consumer Electronics Association. "I think we are entering a post-smartphone era," he said.

Basically what DuBravac appears to mean is simply that 65 percent of time spent on smartphones now is is "non communication activities." The appellation “post smart phone era” simply reflects the fact that communications functions such as calls and texting are no longer the main focus for smart phones.

“The smartphone has become the viewfinder of your digital life,” said DuBravac. Aside from adding one more catchy phrase, it isn’t so clear that the appellation has too much meaning, though.

To be sure, some have used that phrase to describe the next era of computing form factors. It is rather likely that such use of the term is premature, though.

It’s a bit like people talking about “Web 3.0” even before “Web 2.0,” whatever you think that entails, was firmly established.

CEA seems to base the nomenclature on an overall shift in the technology market’s focus away from hardware and toward apps. That’s reasonable. But no more reasonable or accurate than saying computing architecture is shifting to cloud mechanisms.

Nor can we discern much even by looking at device sales. To be sure, IHS iSuppli predicts global smart phone shipments will rise by 28 percent in 2013 to 836 million units, up from 654 million in 2012, at a time when smart phone penetration in most regions of the globe remains at 20 percent or less.

But an “era” of computing should be generally recognized by most people, not something we debate. Nor do the lead apps used by any class of computing devices over time necessarily define a computing era, though that is a more-logical way of defining a computing era.

By such standards, we cannot tell what the developing era “after the PC” will look like, much less be called. To be sure, the argument that we are entering a post-PC era makes more sense.

It surely is fun, but not actually so helpful, to declare even that the “smart phone era” is ending.

None of the Internet's 4 Leaders are at CES. Really

By nearly universal reckoning, there are now four technology companies that truly matter truly matter to people: Apple, Amazon, Facebook and Google. 

None of them are at the Consumer Electronics Show 2013. Some might make an argument for either Microsoft or Samsung as a potential fifth, but those are highly contestable assertions.

Mostly everybody agrees that the four horsemen of the Internet are Apple, Amazon, Facebook and Google. 

You can make your own assessments of what that might mean in the future for a meeting that historically has touted "consumer electronics." Over the years have featured TVs and video entertainment technology, then computers, then mobile phones and now might be adding tablets. 

But lots of the attention this year, to the extent there is a clear theme, seems to be reverting back to TVs and applications that run on TVs. And that might tell you something. Many of us cannot think of a better venue for TVs.

But lots of us would argue that in a world where so much of the value of anything people do with Internet-connected appliances rests with software, CES is losing a good deal of relevance. That none of the "four horsemen" feel they "must" be there tells you something. 

It used to be the case that only Apple was the major player without a presence. These days, the absences are more telling. 

Back closer to the turn of the century, any discussion of the "four horsemen of the Internet" would have featured names such as Cisco, EMC, Oracle and Sun Microsystems. 

Perhaps nine years later, all the names have changed. 

Mobile Industry is Shifting to Vertical, Rather than Horizontal Revenue Opportunities

It would be a reasonable assumption that many emerging revenue opportunities for mobile service providers are of the "vertical," rather than "horizontal" type. In other words, services for specific industry verticals (automobiles, home security, energy, transportation) will drive new revenue opportunities, not generic horizontal applications such as "broadband access" or voice or messaging. 

Some might consider Sirius XM a play on "radio," the analogy being that Sirius XM is to radio as cable TV is to broadcast TV. But Sirius XM also is a vertical play on the automobile vertical, as growth traditionally is driven by "car-deployed" receivers. 

Much activity at AT&T and Verizon, as well as other service providers, now is shifting to vertical, rather than horizontal apps. 

The three areas AT&T is emphasizing at its developer conference indicate the areas AT&T believes are fruitful new revenue sources for the company. "Digital Life" is for the moment highly focused on home automation applications that work with user mobile devices. 


"Mobile Payments" suggests another area AT&T considers fruitful, and obviously will include the Isis mobile wallet system, and probably future mobile commerce elements as well.

The "Connected Car" initiative illustrates the new role of the automotive vertical in thinking about new machine-to-machine initiatives.  


Verizon also thinks the "connected car" market is an important part of the broader machine-to-machine business. 

New AT&T U-verse "Screen Pack" Illustrates "Value-Based Pricing" Dilemma

AT&T is offering U-verse TV customers a new Screen Pack feature, costing $5 a month, and offering access to unlimited viewing of a library of about 1,000 movies. The content can be viewed on U-verse TV, U-verse.com and on the U-verse app for tablets and smartphones, AT&T says. 

In one sense, that is a simple business decision by one Internet service provider. There is no absolute reason why any particular service or application has to be sold at retail on any basis directly related to the cost of providing the service. 

In fact, there is no reason why a firm cannot sell a product at cost, or at a loss. Still, service such at Screen Pack, and streaming of Netflix movies, do raise questions. Ignoring marketing and fulfillment costs, what does bandwidth and content licensing really cost, for such services.

And what level of actual average usage is a "breakeven" business case? By some estimates, a standard two-hour high-definition movie might consume about 3.6 gigabytes. A standard definition movie of the same length might consume only about 700 Mbytes (much depends on coding, of course). 

One presumes there is some clear point where AT&T might start to "lose money" in terms of licensing fees, incur higher network usage that could affect peering deals, or incur consumer displeasure because monthly caps are breached. On the other hand, AT&T and other ISPs might someday create "video-specific" usage plans that accommodate the higher usage heavy video watching represents. 

Though it is not a real question at the moment, one wonders how to reconcile the cost of bandwidth for video, which currently might be said to "cost" as much as bandwidth used for voice, messaging, web surfing or other applications, but which has quite different quantitative dimensions, and a clear expected consumer price point. 

In other words, including costs of bandwidth, peering, marketing, delivery, licensing and other costs, people expect "unlimited streaming" for a small fixed cost. In that sense, the "cost" of any single video event is deemed to be relatively low, even if "value" might be moderate to high. 

Another way of putting matters is that a consumer would expect unlimited access to 1,000 movies for $5, while a bucket of voice minutes of use might cost an order of magnitude more, even while consuming a vastly-smaller amount of bandwidth. 

The way I used to describe this was that 24 hours of video delivery of an older analog TV system would easily represent the equivalent of scores of DS-3s worth of delivered "data."

Yet where a single local DS-3 might cost $10,000 a month, for a cable TV subscriber the cost of scores of DS-3s used for video would be $35 a month up to $80 a month. 

It used to take as much as 24 MHz of bandwidth to deliver a single, uncompressed full-motion video stream, or about half a DS-3. 

These days, using much better coding, we can squeeze multiple standard-definition TV signals into a couple of megabits per second, or less, and a single HDTV signal into 6 MHz of bandwidth. 

The point is that there is a vast difference between the "value" and the "price" of network resources and bandwidth used to deliver a single TV event, compared to two hours of talking or texting, or web surfing. 

On a revenue-per-bit basis, voice and texting are really high value, for the amount of bandwidth consumed. The revenue-per-bit for entertainment video is frightfully low. How to reconcile those extremes is going to be an issue, some day, if value-based pricing happens. 

Video has for some time been driving bandwith consumption, but without a good relationship between value and revenue, from an ISP perspective, or from a retail buyer perspective, based on prevailing tariffs. 

Is Amazon Web Services Worth $19 Billion?

Amazon Web Services is in many ways a proxy for the cloud services business, or at least the infrastructure portion of the cloud services market (infrastructure as a service or platform as a service).

Macquarie Capital estimates that the overall cloud market will hit $71 billion in revenue in 2015 and suggests AWS will have $38 billion, or 53 percent of the total market. Macquarie Capital analyst Ben Schachter therefore estimates AWS would be worth $19 billion, based on a 5X multiple of Macquarie’s 2013 AWS revenue estimate, or $30 billion using an 8X multiple.

OTT Video Will Remain 10X to 100X Smaller Than Subscription TV, Near Term

Technologists often think that because Internet-based tools can change the way people watch cable TV, such changes naturally will occur. Business issues, though are the issue, specifically the scores of billions content owners and video distributors make from the current business model. 

Consumers likely want to be able to buy only what they want, when they want it. But it is asking too much for a big industry to destroy itself. Over the top video revenues will grow, of course, but will remain a small fraction of the overall video subscription business, which might represent $170 billion just in subscription revenues (irrespective of advertising and commerce revenue) by 2016. 

Mobile Advertising in Developed Countries: $3.57 per person up to $36.35

Mobile advertisers in the United Kingdom spend more trying to reach each mobile internet user in the country than anywhere else in the world, according to new estimates by eMarketer. 

Advertisers spent $36.35 per mobile internet user in the United Kingdom in 2012. The United States has the third-highest spending per mobile internet user in the world; advertisers in the country spent an average of $31.50 to reach each one.

 Japan, which is the world's second-largest mobile advertising market in terms of absolute dollars, saw advertisers spend $26.23 per mobile internet user. 

What Makes Mobile Video Different?

If you were looking for one defining characteristic of mobile video, compared to all other formats, "sharing" would be a logical candidate for that unique feature.


In a recent survey by the Interactive Advertising Bureau of 200 mobile video viewers, 92 percent of respondents said that they share mobile video content with others, eMarketer reports. 

The most popular method of sharing listed by respondents was through posts on Facebook or similar social sites (56 percent). 

But 44 percent said they share videos simply by passing their mobile device off to a friend. In other words, formal sharing by instant message, text message, email or a social network post actually understates the amount of video sharing. 

54% of U.S. Homes Will Use Internet Access From "Non-Traditional" Devices by 2017

Some 66 million U.S. households, about 54 percent of all households, will use video set-tops, media players, e-readers, digital photo frames or cameras to connect to the Internet by 2017, Forrester Research estimates.

Such uses will largely be ancillary to primary broadband access connections, rather than full substitutes,  Forrester Research predicts. 

None of that should be surprising. Pundits have predicted for years that, over time, we would move towards ubiquitous Internet access, with computing embedded into the background. 

The extension of computing into automobiles, microwave ovens and refrigerators, payment mechanisms and other appliances is just part of the trend. 

Why 2013 Won't be "Year of Mobile Payments"

Without in any way implying that mobile payments will fail, 2013 will not be, as pundits often are fond of proclaiming, be the "year of mobile payments." The reason is simply that mobile payments requires changing significant business processes throughout a complicate ecosystem, and those changes always take time. 

Consumer demand is not so much the problem. It's all the other changes that have to happen, ranging from replacing store terminals and software to creating a critical mass of end user devices and awareness, as well as providing a clear value proposition.  

At the same time, expectations have been "dampened" by the continuing slow uptake of near field communications. But none of that should be surprising,  in a historical sense. 

Juniper Research has revised its forecasts for the global near field communications market, significantly scaling back its growth estimates for the North American and Western European markets. In some ways, that might be considered a "good" thing, to the extent that it follows a common pattern of technology adoption.

The most significant change to the Juniper Research forecast is the amount of transaction activity NFC devices will drive, as the new forecast reduced the number of NFC devices in use only slightly.

By 2017, global NFC retail transaction values are now expected to reach $110 billion in 2017, significantly below the $180 billion previously forecast. 


Such revisions are not unusual in the predictions business, especially not for a brand new market that depends on many changes in the ecosystem. That tends to mean excessive enthusiasm early on, with an under-appreciation of what is going to change later.

What is "good" about deflated hopes is that such periods seem "always" to happen, and are just a milestone on the way to eventual adoption on a fairly wide scale. So the argument is that dashed initial hopes mean the market is moving in the way one should expect: high hopes, disillusionment, and finally adoption.

Such hype cycles might be viewed as a typical part of the technology adoption cycle for any important new technology.

New technologies historically take some time to reach 10 percent, then 50 percent, then virtually ubiquitous adoption. To be sure, there has been a tendency for new technologies based on digital and electronic technology to be adopted faster. But a decade period to reach perhaps 10 to 20 percent adoption is hardly unusual.

That is not much of an issue for point solutions like computers that can be used without lots of additional change in infrastructure. That is not true for highly-complex ecosystems such as payments, though.

ATM card adoption provides one example, where "decades" is a reasonable way of describing adoption of some new technologies, even those that arguably are quite useful. 

Debit cards provide another example. It can take two decades for adoption to reach half of U.S. households, for example. 

Smart Phones Displacing Several "Dedicated" Devices

It will come as no surprise to long-term observers of technology, but multi-purpose consumer devices are cannibalizing use of single-purpose or dedicated purpose devices such as cameras, watches and music or game players, according to the Accenture Consumer Media Survey 2013.

Purists will continue to note that such decisions typically involve a trade off. Few would argue that a multi-purpose device such as a smart phone always performs as well as a dedicated device for one specific application.

The point seems to be that "good enough" performance is key. Consumers would rather use a device that does many things, and means fewer devices to carry or purchase, compared to many discrete devices. 


From 2011 to 2012, ownership of tablets doubled, while ownership of digital cameras, DVD players, DVRs, portable music devices, portable game devices, and health and fitness devices
remained flat or declined. 

One might argue that another statistic--:"owned but rarely used"--might show even sharper contrasts. 

Devices with decreasing ownership are single-use products, including portable music players,
DVD players and digital photo cameras.

On the other hand, smart phone ownership increased from 26 percent in 2009 to 58 percent in 2012 while ownership of digital photo cameras decreased from 77 percent in 2009 to 68
percent in 2012, Accenture notes. 

UK Companies Not "Mobile First"

Two thirds of companies in the FTSE 100 have websites that are difficult to use on smartphones, a study conducted for the Financial Times shows. 

Whether that is a big problem or not is a matter of opinion. If such reliance on PC-formatted websites were really hitting sales, the firms would already have moved.

Granted, that will change. Google predicts more than half of all web searches will be carried out via mobiles within three years, compared with about a quarter now. One suspects most enterprises will have moved by then. 

But "search" is not the only expected change. Simply creating "mobile" websites probably will not be sufficient. Many enterprises also will need to integrate e-commerce or mobile commerce capabilities at the same time. 

Worldwide 32 percent of smart phone users spend $1 to $20 per month on m-commerce, followed by 12 percent who spend $21 to $40 per month on m-commerce. 

M-commerce revenue was expected to hit $11.6 billion in 2012, up by 73.15 percent compare to 2011, according to dazeinfo.